Italy’s largest dairy group Parmalat has settled a shareholder lawsuit in the US by paying investors stock with a market value of almost EUR24m (US$37m).
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Additionally, Parmalat will pay as much as EUR1m in notification costs to resolve the lawsuit filed in New York, the company said in a statement today (2 May).
“We are happy to have reached an agreement on the class action,” a spokesperson for the company told just-food.
Industry observers had previously speculated that the company could have to pay out considerably more than the value of the deal announced today, with some suggesting that the Italian dairy company could have had to pay as much as ten times the agreed amount. Parmalat declined to comment further on the value of the settlement.
Parmalat collapsed in December 2003 in Italy’s largest bankruptcy. The company later disclosed more than EUR14bn of debt – about eight times the amount reported by its former management.
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By GlobalDataParmalat investors lost as much as US$8bn, lawyers for the investors had claimed.
“We are very pleased with the settlement,” said Stuart Grant, managing partner for Grant & Eisenhofer, co-lead counsel for Parmalat investors.
“We will also continue to press claims against other defendants whom we allege defrauded investors,” Grant said in an emailed statement.
The shareholders’ complaint, filed in Manhattan federal court, also named Citigroup and Bank of America as defendants.
The court still must approve the settlement, Parmalat said.
